Businesses are like people. Each one is unique and different.
And this difference is one of the fundamental keys to effective marketing.
But unfortunately most business owners fail to recognise this and fail to capitalise on the opportunity they have to make their business stand out from the crowd. Sadly this means that many businesses look exactly the same, and worse still, are difficult to differentiate from their competitors.
This leaves potential customers with little choice but to make their buying decisions not based on value, but instead based on price. You may be asking yourself what is the difference between value and price.
Value is essentially the list of benefits that the customer perceives they are receiving when buying your product or service. This can include factors such as the after care service, free or discounted elements such as upgrades and guarantees, or extras they receive as part of the purchase. These extras can be tangible or intangible elements such as the perception that they the buyer are getting something at a bargain price compared to the actual retail price.
Discounting or running sales are examples of when value is being used by a retailer to generate more business. Retailers know that when the price is low enough (or more accurately when the price is promoted as being temporarily low), customers will believe they are getting great value when they make a purchase.
Price is very different; it is simply the cost the buyer pays for the product or service.
But it is wrong to believe that buyers are always looking for the cheapest price. Buyers (and that includes you and I) are actually more interested in value than price. This means we are willing to pay more when we believe we are receiving more in return.
So how does this relate to whether you think your business is unique or not? The truth is business owners who don’t think their business is uniquely different from their competitors (and importantly haven’t positioned or marketed themselves as such), will be forced to compete on price. They have essentially commoditised their product or service, and are relying on customers buying from them because they are the cheapest.
This is of course a dangerous and risky strategy because when a competitor enters the market and offers the same or similar product or service at a cheaper price, the business has little choice but to reduce their own prices further. And very few companies find this is sustainable, and hence are ultimately forced to close or radically reassess their business model or range of products or services.
By comparison, the business owner who believes their business, products, or services are unique instead focuses on customer value rather than price. They recognise that buyers will pay more, even for a highly commoditised product or service, if the value offering is good. So they emphasize the value package they offer, which in many cases may simply be better customer service than their competitors.
Many mass production manufacturers and retailers have capitalised on this situation, not by manufacturing or selling anything distinctly different from their competitors, but by offering a more responsive customer after care service.
In truth many of these companies offer exactly the same levels of customer service and ‘value’, but those that succeed have a deliberate strategy to promote their value package or offering more aggressively or more persuasively than their competitors.
In the SME world, the situation is the same. Those small businesses that succeed actively promote their difference and their value offering (often known as their ‘value stack’) and their customer benefits. They don’t want to be competing on price against competitors; they instead know that customers will pay more when they believe they are getting better value.
Here are some top tips for SME business owners who want a pipeline of customers who are more interested in value than price:
For more help or advice, contact Arup Biswas of Absolutely Write – the SME focused Marketing Specialist of the Year.